Residential sector back on track

Residential sector back on track
The Hindu Business Line, December 6, 2009, Page 15

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We expect demand for commercial and retail space to pick up in six months.
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MR PRANAV ANSAL, VICE-CHAIRMAN AND MD, ANSAL PROPERTIES.

Moumita Bakshi

Fresh out of a fund-raising exercise in September when it garnered over Rs 200 crore, Ansal Properties and Infrastructure Ltd has used the funds to speed up its projects and retire debt. The company is on the verge of unveiling a new township in Gurgaon, which is being billed as the first green township of Asia. It is also gearing up to launch an industrial SEZ in Murthal (Sonepat district) for which it is in the process of getting the required approvals.

Mr Pranav Ansal, Vice-Chairman and Managing Director of Ansal Properties and Infrastructure Ltd, speaks to Business Line on buyer sentiments, the company's plans and the response to the affordable housing projects announced earlier this year.

Excerpts from the interview:

In January, the company set itself a target of selling 10,000 dwelling units in the affordable housing segment during 2009. What is the position in terms of actual sales of those units?

We have already sold 8,500 units and we should be able to reach the full target by January 2010. In fact, we are handing over possession of some of the projects in December, including the Jodhpur project.

Is buyer interest back in the residential market?

The residential demand is back to normal and people have started buying property as earlier. The investor is out of the market and so the buyers are actual users who opt for bank financing. In that sense, it is a better situation for developers now.

Although the residential sector is totally back on track, the commercial and the retail realty side are still under pressure. Now that business operations have started to stabilise, in the next six months or so, I expect commercial office and retail real-estate sector also to pick up.

In my view, given another three to four months, companies will start looking at growth.

That is when they will also look for office and commercial space. Also, remember that over the last 12-18 months new development on the commercial side has been limited, so there will be a demand spill-over effect.

On the residential side, of course, the demand is largely in affordable housing. From a company's point of view, a large portion of our business is in that category. But even for high-end development in Delhi NCR, at least the ready projects are finding takers.

Since you say the market is stabilising, are you lining up new projects?

We are going to announce a new township in Gurgaon very soon. It is spread over 120 acres and once we get licence and approvals sometime in January, we will launch it. It will be unique in the sense that it is the first residential green township of Asia.
As things stand today, there is a concept of green buildings. But we are looking at a horizontal township. This will be certified by LEED. We are working towards a gold certification, where all the materials used will be environment-friendly, and the township will utilise solar power. We have already invested Rs 350 crore for the land, and are now waiting for clearances.

The company had put on hold its plans for hotels. Will you revisit those plans now?

We have not yet applied our mind to the issue. In fact, we have a meeting in December (on this) and so we will probably take a call.

And the SEZ projects?

The industrial SEZ is a big project for us and it is coming up in Murthal (in Sonepat district). We are in the process of getting approvals now.

I think we will launch it in December. We are convinced about the viability, given the huge demand. See Karnal, Panipat and Ludhiana are huge industrial belts, but pollution norms have become very stringent. So a lot of factories running in those locations are closing down. However, the IT SEZs are still on hold because there is still not much of demand.

After the recent fund raising, which saw IPRO, a Mauritius-registered fund, picking up nearly 10 per cent stake, are there any more plans to raise money from the market?

We raised close to Rs 200 crore in September this year. That money has already come in; it has been used for projects, expansion and retiring debt. We are not looking at any other fund-raising plan at this time.

The company retired some debt from the funds that were raised. Our debt position earlier was about Rs 1,100 crore and we would have retired roughly Rs 50-100 crore. Most of our debt is long-term and our projects are comfortably paying for it. So there is no problem.